SMU SOE Seminar Series (April 11, 2024): Dating and Divorce

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TOPIC:

DATING AND DIVORCE

ABSTRACT We introduce private information and divorce in a standard search and matching model of marriage without transfers. Forming a marriage allows agents to find out about each other's types, and then decide whether to incur the cost of divorce and re-enter the market or to save the divorce cost and remain in the marriage for the lifetime. We show that informative pre-marriage cheap talk communication (dating) can decrease marriage rate and at the same time increase the divorce rate. This is because the parties can partially reveal private information about each other through communication, which makes them more selective in their marriage decision. At the same time communication improves the future prospects after divorce, which makes the parties more willing to end less desirable marriages. In the main model with two types, when both a steady state equilibrium with dating and divorce and a babbling equilibrium with no divorce exist, the high type is better off with dating and divorce and the low type is worse off. Both the coexistence of the two steady states and the welfare comparison extend to a model with a continuum of types on both sides of the market. In the model with a continuum of types we show that, under partners’ incomplete information about each other and informative communication, classes intermarry. So class structure becomes less rigid, thus providing a counterpoint to the findings of Burdett and Coles (1997). Click here to view the CV.
		PRESENTER Sergei Severinov The University of British Columbia
		RESEARCH FIELDS Game Theory Microeconomics Industrial Organization Law and Economics
		DATE: 11 April 2024 (Thursday)
		TIME: 3pm - 4.30pm
		VENUE: Meeting Room 5.1, Level 5 School of Economics Singapore Management University 90 Stamford Road Singapore 178903

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